The Grain Hedge Team provides a macro-focused daily view of the world’s grain markets. Kevin McNew received a bachelor’s degree from Oklahoma State University and his master’s and Ph.D. degrees in Economics from North Carolina State University. He spent 10 years as a Professor of Economics with the University of Maryland and Montana State University focusing on commodity markets and is widely regarded for his ability to boil-down complex economic situations into easy-to-understand concepts for applied life.
Corn Hits $5
Mar 07, 2014
Grains were sharply higher overnight as strong export demand and weather problems continue to boost prices. Soybeans and wheat gained 20 and 16 cents, respectively while corn was up 8 cents a bushel in the night session.
May corn has climbed this morning to a six-month high of just shy of $5 and is up 8.5% since the end of last week. The conflict between Russia and Ukraine over the Crimean peninsula is continuing to give corn a lift. According to the Ukrainian minister of agriculture, foreign trading companies are not concluding any new grain export contracts at present due to the tensions. The USDA currently estimates that Ukraine will export 18.5 million tons of corn in total in the ongoing 2013/14 crop year. As such, Ukraine is the third-largest corn supplier worldwide after the US and Brazil. According to the US Grains Council, which represents the interests of US grain exporters, Ukraine has exported 15 million tons of corn to date, meaning that a further 3.5 million tons of corn would be available for export. The problems in Ukraine are likely to increase demand for US corn.
For soybeans, old-crop supplies in the US look to be tightening as export sales continue to be unexpectedly strong for this time of year. Thursday’s USDA report showed 772,000 MT of sales pushing total commitments for the marketing year to 44.1 MMT versus USDA’s annual forecast of 41.1 MMT. In Brazil, logistics problems and a slow harvest are keeping their supplies off the world market for the time being. On Thursday, the Buenos Aires Grain Exchange estimated the Argentina 2013/14 soybean crop at 54.5 MMT, up from the previous estimate of 53.0 MMT.
In wheat, Thursday’s export report showed reasonable business for old-crop. Net sales of 556,100 MT for delivery during the 2013/2014 marketing year were up 52 percent from the previous week and 10 percent from the prior 4-week average.